Blinkit Well Placed To Dominate Quick Commerce Despite Rising Competition: Bernstein

Zomato-owned Blinkit is expected to build on its dominant position in the quick commerce market even as competition intensifies in the short term amid an aggressive land grab by Swiggy Instamart and Zepto and the entry of new players, according to Bernstein.

Despite short term intensity, the brokerage expects Blinkit to maintain its lead over rivals due to early mover advantage and strong execution. 

“Even if we play out a more competitive scenario in the next few quarters, we believe there’s a rational limit to price competition given Swiggy’s lower margin structure,” Bernstein said.

Analysts at Bernstein noted that over the past six months, several new players have joined the quick commerce race. While the likes of Flipkart, Amazon and BigBasket have pivoted from grocery delivery to a quick commerce model, new-age tech startups like Blip, Farmako, and Swish are targeting specific categories.

Their entry into quick commerce comes amid rising demand and a surge in sales in the segment. Blinkit, Instamart and Zepto together recorded nearly $1 Bn in sales in FY24.

However, the rising competition has set Blinkit and Swiggy Instamart off the adjusted EBITDA margin breakeven course by at least 12 months, according to Bernstein.

It attributed this to higher customer acquisition costs, higher dark store costs due to aggressive expansion, and higher fixed costs, including branding and promotion.

“We expect Blinkit to achieve breakeven by Q3 FY26 and Instamart to achieve adjusted EBITDA breakeven by Q1 FY28. We think the near term margin impact will be offset by scale in the medium term, setting up the stage for faster margin accretion in the medium term,” the brokerage said.

It is pertinent to note that Blinkit added 216 new dark stores during the quarter ended December 2024, taking the total count to 1,007. It now aims to almost double its dark store count to 2,000 by Q3 FY26. In comparison, Instamart ran 705 dark stores as of December 31, 2024 and scaled its quick commerce presence to 76 cities.

Blinkit posted an adjusted EBITDA loss of INR 103 Cr in Q3 FY25 as against a loss of INR 8 Cr in the preceding September quarter. 

Bernstein analysts expect Zomato’s adjusted EBITDA margin to expand in the medium term and reach 43% by FY28, with the EBITDA margin of Blinkit expected to be around 5%. On the other hand, Swiggy is likely to reach breakeven by Q3 FY26.

The brokerage has maintained its outperform rating on Zomato with a target price of INR 310. This implies a potential upside of over 39% from the stock’s last closing price of INR 222.60 on the BSE.